John Lothian Newsletter: SEC Reviewing U.S. Trading Practices After Decade-Long Shift to Automation; BGC To Ramp Up Investment In ELX Exchange; EU Bid to Control Bank Capital Rules Said to Face Challenge

Feb 27, 2012

The SEC increases its consideration and attention on the role of technology and automation in trading, after giving the industry a decade’s head start on the issue. BGC Partners increases its stake in the ELX Futures Exchange. Now it’s not just Britain; at least four European nations are getting a stiff neck over the EU’s intent to regulate the bank capital of individual states.  The MF Global investigation shifts to wire transfers made by the company, but the investigative song remains relatively unchanged. In the top box, Sarah Rudolph reports on John Damgard’s recent speech, his last as FIA president.

Observations – Statistics – Commentary

Republicans Will Rule in House and Senate, But Have Trouble Revising Dodd-Frank, Says John Damgard 
Sarah Rudolph – JLN
In what he said was his last speech as president of the Futures Industry AssociationJohn Damgard was optimistic that Republicans would dominate both the Senate and the House in the next election, but not that they would be able to undo any of the provisions of the Dodd-Frank legislation to which they object.

Damgard told the Union League Club of Chicago that he expects the House to remain Republican and even gain a few more seats, and that the Senate will likely pick up four to six Republican seats. 

“The recent redistricting has guaranteed Republicans control of the House for the next 10 years,” he said. Odds are stacked against the Democrats, as super PACs are focused on supporting Republican House members, and the Republicans have stymied the Democrats with the Supercommittee, he added.

Read the rest here.


NYSE’s Amex Market Hit With Thousands Of Erroneous Trades
Wall Street Journal Blogs
NYSE Euronext’s Amex options market was flooded with more than 30,000 erroneous trades on Friday in what traders said was likely an automated strategy running off course.

**** Do you fine a computer or throw it on the junk heap?


ICE Futures Europe Announces First EUAA Trade
IntercontinentalExchange, a leading operator of regulated global futures exchanges, clearing houses and over-the-counter (OTC) markets, announced the first trade in its new futures contract on European Union Aviation Allowances (EUAAs), which was introduced for trading today.


IntercontinentalExchange Hands CEO Jeffrey Sprecher a 35% Raise – cbl
By Bill Murphy – CityBizList
IntercontinentalExchange has handed Chairman and CEO Jeffrey C. Sprecher a new three-year contract with an annual base salary of $1.05 million, a 35 percent rise over the 2009 level, plus undisclosed bonus and stock, according to an SEC filing.

***** If he hits above .300 and has 500 plate appearances per year, he also gets a bonus.


10 myths about the European quagmire
Commentary: Greece isn’t small, Portugal isn’t fixed, Markozy aren’t BFFs
By David Marsh, MarketWatch
The member countries of economic and monetary union (EMU) seem to have elected for years of hope and pain rather than the “big bang” solution, which would have been to allow Greece to leave the euro in the near future in a (relatively) orderly way. Some kind of bust-up however is still on the cards. When it may happen is a matter of conjecture.


A Turn Signal on Street’s Random Walk
Surprise, surprise: Wall Street number crunchers can quantify, and profit from, their industry’s penchant for acting like lemmings. The Citigroup U.S. Economic Surprise Index takes a weighted average of the gaps between economic data and the consensus expectations of economists, and gives more weight to recent news and market-moving items. A positive index number means reports are tending to beat forecasts.


Meetings of minds are effectively a tool for dulling them
By Lucy Kellaway – Financial Times
The other day I went out to lunch with a businessman whom I rather admire. A fly on the wall might have deemed the occasion a success: the conversational ball was batted back and forth easily enough. Yet for me, it wasn’t so good. The problem wasn’t my host, who was clever and charming. Instead it was me: I chewed my way through three courses feeling a dullard. It turns out that there is a scientific basis for what was happening inside my head. It’s not just that I felt a dullard; I actually became one.


MarketsWiki Page of the Day
Stefan Boel


MarketsWiki Recent Updates


Jeff PierceStefan BoelPhilip M. SlocumEdward L. Provost

Companies, Organizations and Groups

AurubisIMCTwoFourChicago Board Options Exchange


19,939,961 pages viewed, 6,710 articles, 137,391 edits
MarketsWiki Statistics

Lead Stories

SEC Reviewing U.S. Trading Practices After Decade-Long Shift to Automation
By Nina Mehta and Josh Gallu – Bloomberg
The U.S. Securities and Exchange Commission is examining equity trading practices that gained dominance in the past decade amid a shift to automation, according to an official in the agency’s enforcement division.

BGC Partners To Ramp Up Investment In ELX Futures Exchange
The top executive of BGC Partners Inc. (BGCP) said Friday the brokerage would step up its investment in ELX Futures LP as other investors in the derivatives exchange trim their stakes.

EU Bid to Control Bank Capital Rules Said to Face Challenge
At least four nations may challenge European Union plans to limit their power to regulate bank capital as governments seek a compromise on implementing global rules on the reserves lenders must hold to prevent a financial crisis, according to four people with knowledge of the matter.

Investigators Scrutinize MF Global Wire Transfers
Federal investigators examining the final days at MF Global and how customer money went missing are poring over scores of wire transfers in and out of the brokerage firm, including the possible movement of $325 million that may have belonged to customers, according to people briefed on the matter.

G20 chiefs: Europe needs a bigger financial firewall
CNN Money
European leaders have taken “substantial” steps to contain the eurozone debt crisis, but they need to build a stronger financial firewall to ensure the safety of the global economy, top finance officials said Sunday.

Draghi’s Unlimited Loans Are No Panacea for Banks: Euro Credit
European Central Bank President Mario Draghi’s success in quelling a bond-market rout across the euro region’s periphery masks a failure by the region’s banks to bolster their capital.

Statement By IMF Managing Director Christine Lagarde On G-20 Ministerial Meeting In Mexico City

Remarks By U.S. Treasury Secretary Tim Geithner At The G-20 Meeting Of Finance Ministers And Central Bank Governors

Environmental Trading News

EU to Consider Limits to UN Excess Emission Rights, Draft Shows
European Union countries will next month discuss restrictions on United Nations emissions permits after 2012 that may include limits on sales and the use of revenue from excess rights, according to a draft EU document.

**RKB — Analysis cites increased likelihood limits to be passed in crunch vote next week.

EU airline retreat would cut 2 euros from EUA price: SocGen
Point Carbon
Excluding airlines from the EU Emissions Trading Scheme would cause prices to fall by up to 2 euros as it would remove the second biggest buyers of CO2 permits from the market, analysts at SocGen said Friday.

World Bank Resumed Carbon Credit Sales After Fund Missed Higher Prices
The World Bank, acting as trustee for the United Nations Adaptation Fund, resumed sales of UN emission credits at the start of this month after the fund missed higher prices at the end of last year.

For more environmental trading news, subscribe to the Environmental Markets version of the John Lothian Newsletter edited by Jim Kharouf. 
Visit to subscribe.

Exchange & ECN News

BATS plans European listings venue
By Philip Stafford in London – Financial Times
BATS Global Markets, operator of the third-largest US stock exchange, is to open up a new front in its challenge to Europe’s incumbent bourses after it confirmed it was looking to set up as a listings venue in the region.

Nobody Wants TMX With 198% Arbitrage Profit on Maple Acquisition: Real M&A
TMX, owner of the Toronto Stock Exchange, is trading 15 percent below a C$50-a-share offer from 13 Canadian banks and pension funds known as Maple Group Acquisition Corp. The gap is the widest of any billion-dollar deal in the U.S. or Canada, indicating traders aren’t convinced Maple can get the approvals it needs even after the group extended its Feb. 29 deadline by a month

Maple Group and TMX Group Announce Extension of Offer To TMX Group Shareholders To March 30, 2012

BATS Global Markets Profit Up 18.7% In 2011 On Trading Fees 
BATS Global Markets Inc. reported an 18.7% rise in profit last year, though the exchange company’s acquisition of a larger European stock market was seen weighing on BATS’s overall profitability.

ICE Futures US: Interval Price Limit Functionality
Effective with the start of trading for trade date Monday, March 12, 2012 the Exchange will introduce new electronic trading platform functionality known as Interval Price Limits (“IPL”).

CME Clearing – New Product Advisory
PJM AD and NI Hub 50 MW Option and Swaption Contracts

CME Group Clearing Advisory
1st Quarter 2012 Eligible Stocks (Data from October 1st thru December 31st, 2011)

[CBOE] Trader E-News

Program Trading Averaged 30.8 Percent of NYSE Volume during Feb. 13-17

TOM MTF Statistics Week 8 2012

BM&FBOVESPA S.A Notice To The Market – Decrease Of Shareholder Participation_Lone Pine

BM&FBOVESPA: Trading Session Starts At 10 AM Again As Of March 12

Warsaw Stock Exchange Acquires POLPX Shares

MICEX-RTS Indices Weekly Review: February 13 – 17, 2012

Banks, Brokers & Dark Pools

GETCO Names Daniel Coleman CEO
Business Wire via Yahoo! Finance
Global market maker GETCO today announced that Daniel Coleman has been named chief executive officer, effective immediately. Coleman assumes the role of CEO after serving as the firm’s global head of equities and client services.

Coleman goes ‘full-circle’ for Getco role
By Telis Demos in New York – Financial Times
Amid warnings of dire consequences if regulators clamp down on risk-taking by big banks too aggressively, many financial groups are in turn preparing to step into the role once occupied by global dealers.

At the E.C.B., the Tweak That Quietly Saved the Banking System
New York Times
The decision last autumn to lengthen the terms of low-cost loans to three years enabled some banks that had been on the brink to roll over their corporate bonds. Another offering takes place this week.

G-20 Skirts World Bank Leadership Race as Europe Dominates Talks
Group of 20 officials meeting in Mexico City were too busy debating how best to help Europe contain its debt crisis to find time to tackle another divisive issue: who will be the next president of the World Bank.

Sir David Lees Re-Appointed Chair Of Bank Of England Court
Press Release
Her Majesty The Queen has approved the Chancellor and Prime Minister’s recommendation for the re-appointment of Sir David Lees as Chair of the Court of the Bank of England.

BGC Partners Reports Fourth Quarter and Full Year 2011 Financial Results

HSBC profit up 28%, helped by Asia, Latin America
Market Watch
HSBC Holdings PLC on Monday reported that 2011 profit rose 28%, helped by strong growth in what it termed fast-growing markets, such as Asia and Latin America.

HSBC awards Gulliver £5.9m in bonuses
By Sharlene Goff – Financial Times
HSBC awarded its chief executive £5.9m in bonuses and longer-term incentives for 2011 as the bank revealed a 6 per cent fall in underlying pre-tax profit for the year.

UBS Says Neissa Leaving, Hires Molinaro for Investment Bank
UBS AG’s joint head of global investment banking Jimmy Neissa plans to leave the company at the end of March to focus on family business, Carsten Kengeter, head of the investment bank, said in a memo to employees.

Citigroup Says Cyber Attackers Gained Access to Customer Data
Citigroup Inc., the third-largest U.S. lender, said cyber attackers got into customer accounts last year as the threat of electronic intrusions increased.

Morgan Stanley Chosen by BlackRock for Swaps Clearing Access
Morgan Stanley has been chosen as one of the swaps clearing brokers for BlackRock Inc., the world’s largest money manager, ahead of new rules requiring most trades to be processed by clearinghouses.

Wells Fargo set for further expansion
By Tom Braithwaite in New York – Financial Times
Wells Fargo plans to increase the size of its wealth management and insurance divisions through acquisitions as well as buying more assets from shrinking European banks, its chief executive says.

Wells Fargo Seeks to End Mortgage-Repurchase Duties as Trustee
Wells Fargo & Co.’s mortgage-bond trustee division is planning to hand its duties to investigate soured home loans and pursue lender repurchases to other companies, in a move meant to address the appearance of conflicts of interests, an executive said.

Fees cited as nearly 10% of customers switch banks
Chicago Tribune
Nearly 10 percent of customers of U.S. banks moved their accounts last year, often after they became frustrated with fees and the quality of service, market research firm J.D. Power and Associates said on Monday.

Reader Firestorm Over FINRA Query Re: Sharing Broker Information With For-Profit Companies
Earlier this week Financial Planning reported on a request for comment FINRA sent around, seeking input regarding some changes it is weighing with respect to BrokerCheck.

Regulatory News

The SEC News Digest
The SEC News Digest provides daily information on recent Commission actions, including enforcement proceedings, rule filings, policy statements, and upcoming Commission meetings.

SEC probes exchanges and electronic trading firms ties
The U.S. Securities and Exchange Commission has launched a probe into the ties between stock exchanges and certain electronic trading firms, the Wall Street Journal reported on Saturday, citing people familiar with the matter.

SEC ‘flash-crash’ rules vote in a month: official
Market Watch
A top Securities and Exchange Commission official on Friday said the agency expects to vote in a “month or so” on whether to approve proposals in the wake of the flash-crash of May 6, 2010.

SEC chief wants more rules for money market funds
Washington Post
Investors in money market funds “have been given a false sense of security,” and the industry needs more regulation because it is “working without a net,âE? the head of the Securities and Exchange Commission said Friday.

Banks Need Simpler, Tougher Capital Standards: Phil Angelides
By Phil Angelides – Bloomberg
When JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon appeared before the Financial Crisis Inquiry Commission, he testified that he told his daughter a financial crisis is something that happens every five to seven years. That observation turned out to be overly optimistic.

S.E.C. Defends Its Efforts to Fight Financial Fraud
A panel of Securities and Exchange Commission regulators gathered in Washington on Friday to trumpet their recent crackdown on financial fraud and Wall Street wrongdoing. The regulators, in particular a group of high-ranking enforcement officials, highlighted efforts to root out everything from insider trading at hedge funds to toxic mortgage securities sold by big banks.

SEC Charges Three Oil Services Executives With Bribing Customs Officials in Nigeria
The Securities and Exchange Commission today charged three oil services executives with violating the Foreign Corrupt Practices Act (FCPA) by participating in a bribery scheme to obtain illicit permits for oil rigs in Nigeria in order to retain business under lucrative drilling contracts.

Schapiro: Considering capital rule for money funds
MarketWatch via Yahoo! Finance
Securities and Exchanged Commission Chairman Mary Schapiro on Friday said there are two serious options the agency is considering for addressing the “core structural weakness” …

ESMA Readies Guidelines On Automated Trading – Application Deadline Starts

Speech By SEC Chairman, Mary L. Schapiro: Remarks At The Practising Law Institute’s SEC Speaks

Shining A Light On Expenditures Of Shareholder Money By SEC Commissioner Luis A. Aguilar – Practising Law Institute’s SEC Speaks In 2012

Remarks At The SEC Speaks In 2012 SEc Commissioner Elisse B. Walter
Press Release

Remarks At “The SEC Speaks In 2012” By SEC Commissioner Troy A. Paredes

Remarks By SEC Commissioner Daniel M. Gallagher At The Credit Suisse Global Equity Trading Forum

Speculators And Commodity Prices Redux: CFTC Commissioner Bart Chilton

AMF launches public consultation on Internet insurance offerings in Québec

Investments – Indexes – Managed Futures – Managed Funds

Volcker Punishes Small Bonds in Liquidity Trap: Credit Markets
By Matthew Leising – Bloomberg
Tougher regulations on risk-taking by banks and the growth of exchange-traded funds that buy the most actively traded junk bonds are penalizing smaller borrowers seeking capital.

UBS Macro Team to Start Hedge Fund as Banks Exit Prop Trading
UBS AG’s only team of traders with a global mandate to make bets on macroeconomic trends is leaving the bank to form a hedge fund, said Gerard Satur, the head of macro strategic trading who will lead the fund.

A New Tool in the Hedge Shed
Volatility in the foreign-exchange markets over the past couple of years has made life tougher for the executives who manage the currency risk of multinational companies. But many are finding some relief in a tool whose popularity was growing even before this latest bout of market skittishness—bonds denominated in foreign currencies.

Blackstone Raises $10 Billion
Blackstone Group LP has raised more than $10 billion in less than a year for its latest real-estate fund and is looking to raise an additional $2 billion by year’s end, according to people familiar with the matter.

Wells Fargo Sells Majority Stake in Overland Advisors Hedge Fund
Wells Fargo & Co., the largest U.S. lender by market value, agreed to sell a majority interest in Overland Advisors LLC to speed the hedge fund’s independence.

Pimco Total Return ETF Shines a Light on Transaction Costs
The launch of the Pimco Total Return Exchange-Traded Fund will test the mettle of investors with trillions of dollars invested in traditional bond mutual funds. But no investors will be more challenged than those with billions already managed by Bill Gross in the Pimco Total Return Fund.

Don’t Expect Warren Buffett To Take Any New Positions In Derivatives
Business Insider
Anyway, don’t expect Buffett to take any new positions in derivatives. In his l atest letter to Berkshire Hathaway shareholders , the Oracle of Omaha writes that he isn’t too crazy about the new collateral rules.

Standard & Poor’s Announces Changes In The S&P/TSX Canadian Indices

Dow Jones Indexes To License Two Dividend Indexes For New iSshares ETFs

Technology News

Fidessa extends fragmentation analysis tools with Japanese language version of the FFI
Fidessa group plc (LSE: FDSA), provider of high-performance trading, investment management and information solutions for the world’s financial community, has today announced the launch of a dedicated Japanese language version of its award-winning global fragmentation index. Fidessa’s fragmentation analysis tools (freely available at provide essential analysis on the global equities trading landscape and make insightful comparisons between different venue types across geographies and over time. Fidessa initiated coverage of the Japanese market following the launch of Chi-X Japan in July 2010.

Datacom Systems Expands Sales Presence Internationally With Appointment Of VP International Sales In London, UK
Press Release

Media News

Bloomberg to reveal data service redesign
By Andrew Edgecliffe-Johnson in New York and Philip Stafford in London – Financial Times
Bloomberg will announced a $100m-plus redesign of its eponymous market data service on Monday, heightening its rivalry with Thomson Reuters by seeking to make its complex 30-year-old system simpler, more intuitive and easier to navigate.

Disruptions: Growing Too Big for a Conscience
In 2000, when Google could count its employees by the dozen, it adopted its now famous mantra: Don’t be evil. Now, 12 years later, Google has more than 30,000 employees with annual revenue of $38 billion and growing, and although it still sees itself as a company doing good, its latest actions raise the question: Is Google too big not to be evil?

Facebook prepares to ramp up ads
Jessica Guynn, Los Angeles Times
Facebook’s status used to be measured in the meteoric number of users who flocked to the world’s most popular online hangout. Now Wall Street is wielding a very different yardstick. It’s focused on how many ads Facebook can sell.

Reports Economic Calendar

USDA Today

CBOE Events Calendar

Economic Release Calendar
The Economic Release Calendar (PDF) is a schedule of government, academic and industry economic releases, provided as a service to CME customers.

Asia-Pacific News

Osaka Exchange Debuts Japan’s First Stock Volatility Futures
By Eleni Himaras – Bloomberg
The Osaka Securities Exchange Co. started offering Nikkei 225 Volatility Index futures today, the first exchange-traded Japanese securities that allow investors to hedge against swings in the stock market.

China embarks on latest reform blitz
By Craig Stephen – MarketWatch
According to news last week, mainland Chinese authorities are readying for a reform blitz, from currency convertibility to overhauling state-owned enterprises (SOEs), and even changes to the “hukou” registration system.

AIJ Probe by Japan Regulator Undermines Pensions Alternative Asset Plans
The suspension of AIJ Investment Advisors Co.’s operations amid concerns hedge funds it manages had lost pension money may undermine plans by Japan’s retirement funds to boost returns to meet demand in an aging society.

KVH and Koscom to Launch Proximity Services for KRX’s Derivatives Trading
KVH Co. Ltd., Asia’s leading information delivery platform, and Koscom, a leading financial IT solutions provider, announced today that they will offer proximity hosting services for the Korea Exchange (KRX) derivative trading customers at Koscom’s new data center in Busan.

HKEx: Listing Nominating Committee Extends Application Period For Listing Committee Candidates
Press Release
The Listing Nominating Committee has extended the application period for nominations to Listing Committee to 10 March 2012 from 3 March 2012. The Listing Nominating Committee is seeking applications from individuals interested in serving on the Listing Committee and the Growth Enterprise Market (GEM) Listing Committee

HKEx Announces Personnel Change – Chief Administrative Officer Resigns

Frontier Markets

Japan’s Nomura gets OK to access Saudi shares
Market Watch
Japanese investment bank Nomura said Monday it has received approval from the Saudi market regulator to offer international investors access to local stocks. The approval for Nomura comes at a time when there are growing expectations that Saudi Arabia will allow foreign investors greater direct access to its stock market.

UAE gold trading makes strong start in 2012
CPI Financial 
Trading in gold futures on the Dubai Gold and Commodities Exchange (DGCX) rose 355.7 per cent between January to December 2011 period, while the total futures volume for the exchange was up 95 per cent for the month over the prior January.

Libya amending bank law to attract foreigners
Reuters via Yahoo! News
Libya is amending its banking laws to attract foreign investment and stimulate its private sector as it seeks to create an investor-friendly environment following last year’s war that ousted Muammar Gaddafi, the central bank governor said.

India Said to Propose BRICS Bank to Fund Emerging Nations
India has proposed setting up a multilateral bank that would be exclusively funded by developing nations and finance projects in those countries, two government officials with knowledge of the matter said.

The Saudi Stock Exchange (Tadawul) Announces The Display Of The Put-Through Trades Information On Its Website

The Egyptian Exchange (EGX) Update As Of 26 February 2012

Results Of Dubai Financial Market PJSC Board of Directors’ Meeting

Dubai Financial Market (PJSC) Records Net Profit Of AED 8 Million In 2011Abdul Jalil Yousef Darwish: Encouraging Indications On The Success Of The Company’s Efforts To Limit Dependency On Trading Commissions

Dubai Gold & Commodities Exchange Weekly Market Commentary – February 26, 2012

Malawi Stock Exchange Weekly Report – Week Ending 24th February

Miscellaneous News

The metamorphosis of Ben Bernanke
by Gavyn Davies – Financial Times
Ben Bernanke has been assailed from all sides in the economic debate in recent times. Perhaps that happens to all Fed Chairmen (except, remarkably, to Alan Greenspan, whom almost no-one criticised while he was in office). But in Chairman Bernanke’s case, the criticism has been strident, reflecting the polarisation of views on economic policy in general.

John Lothian Newsletter

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past JLN Newsletters

Pin It on Pinterest

Share This Story